In March 2002 the Barcelona European Council analyzed the Lisbon Strategy and its implementation, and set the target to increase the average research investment level from 1.9% of GDP today to 3% of GDP by 2010, of which 2/3should be funded by the private sector.

Abstract

The European Council has, on the basis of the Commission's Spring Report, reviewed progress made in the first two years of the Lisbon strategy. It notes that there have been important successes, but also that there are areas where progress has been too slow. It took into account the contributions from various sectoral Councils. The objective now is to simplify and consolidate this strategy so as to ensure more effective implementation of the decisions already taken, and of those taken today. In order to maintain the momentum of the Lisbon long-term strategy, the strengthening of the following priorities seem necessary:

_ Coordination of economic policies.Coordination of fiscal policies is anchored in the commitment to sound public finances and rules of play agreed in the Stability and Growth Pact. Member States will maintain or respect the medium term budgetary objective of close to balance or in surplus by 2004 at the latest. Automatic stabilisers should be allowed to play symmetrically, provided that the 3% of GDP limit is not breached in downturns. The European Council invites the Council to continue to examine the long-term sustainability of public finances as part of its annual surveillance exercise, particularly in the light of the budgetary challenges of ageing.

The Eurozone is a monetary union working under a single and independent monetary policy and decentralised but coordinated fiscal policies. There is a need, therefore, to make further progress by:- Improving and harmonising the methodologies used to draw up Eurozone statistics and indicators. The Commission and the Council are invited to present a comprehensive report on Eurozone statistics in time for the Spring European Council 2003.- Conducting a systematic analysis of the Euro area's policy mix as a whole, in order to assess the consistency of monetary and fiscal policies with respect to economic developments.- Reinforcing existing fiscal policy coordination mechanisms. In this regard, the Commission will present proposals to reinforce economic policy coordination in time for the 2003 Spring European Council.

In this context, the European Council endorses the Key Issues Paper. This will be the basis of the Broad Economic Policy Guidelines, which will be targeted and specific, identifying key economic challenges and proposing concrete measures to tackle them. Focal points will be the quality and sustainability of public finances, pursuing further necessary reforms in product, capital and labour markets and ensuring coherence with the policies established in each domain.

_ Sustainable Development.Growth today must in no event jeopardise the growth possibilities of future generations. The Sustainable Development Strategy means that the various policies should be consistent with the Union's long-term objectives. Economic, social and environmental considerations must receive equal attention in policymaking and decision taking processes.The European Council welcomes the decision on the ratification of the Kyoto Protocol on behalf of the European Community. It urges Member States to complete their national ratification procedures by June 2002. The Protocol should enter into force before the World Summit on Sustainable Development in Johannesburg. The European Council recalls its invitation made at Göteborg to other industrialized countries.The European Council recognises the importance of the Sixth Environmental Action Programme as a key instrument for progress towards sustainable.The European Council underlines the following further action requirements:

- Notes the intention of the Commission to present in 2002, following its report on environmental technologies, an Action Plan for tackling obstacles to their take up; notes the intention of the Commission to accelerate its work on the preparation of a framework directive on infrastructure charging, to ensure that by 2004 different modes of transport can better reflect their costs to society.- Notes the intention of the Commission to include, before the end of 2002, a sustainability dimension in the impact assessment which will form part of its wider efforts in the field of better regulation.- Asks the Council, in parallel with the agreement on the opening of the energy markets, to reach an agreement on the adoption of the energy tax directive by December 2002, bearing in mind the needs of professionals in the road-haulage industry.- Agrees on the need for the European Union to show substantial progress in enhancing energy efficiency by 2010.

With a view to the Monterrey Conference on Financing for Development, the European Council welcomes the agreement reached on ODA by Foreign Ministers. This states that in pursuance of the undertaking to examine the means and timeframe that will allow each of the Member States to reach the UN goal of 0.7% ODA/GNI, those Member States that have not yet reached the 0.7% target commit themselves - as a first significant step - individually to increasing their ODA volume in the next four years within their respective budget allocation.The European Council shall, on the basis of the Commission's communication "Towards a Global Partnership for Sustainable Development" and the conclusions of the Environment Council of 4 March 2002, determine the overall position of the European Union for the Johannesburg Summit at its June meeting in Seville, and in Spring 2003 will review the comprehensive strategy for sustainable development with a focus on putting into practice the outcome of the World Summit on Sustainable Development. It underscores the importance of improved global governance in this field.

_ A more favourable environment for entrepreneurship and competitiveness.

Entrepreneurship and a well-functioning internal market are key to growth and job creation. The regulatory environment should encourage entrepreneurial activity and make it as simple as possible to set up new businesses, in particular through the full use of the Internet. The European Council asks Member States to speed up the implementation of the European Charter for Small Enterprises and to learn from best practice. The European Council takes note of the Commission's intention to submit a green paper on entrepreneurship before the 2003 Spring European Council. As from this year, the Council will meet, before every Spring European Council, to assess progress in this area. The European Council considers that the Basel Committee on Banking Supervision should ensure that its work does not result in discrimination against small and medium sized enterprises and requests the Commission to present a report on the consequences of the Basel deliberations for all sectors of the European economy, with particular attention to SMEs (Small and medium-sized enterprises).

Full implementation of all internal market legislation is a prerequisite for the proper functioning of the internal market. Although progress has been made, the interim transposition target of 98.5% set in Stockholm has only been achieved by seven Member States. Efforts need to be stepped up. The European Council calls on Member States to make further efforts to meet that target and for a transposition target of 100% to be achieved by the Spring European Council in 2003 in the case of directives whose implementation is more than two years overdue.The European Council welcomes progress on modernising Community competition rules. It attaches the utmost priority to the on-going work in this regard and calls on the Council to adopt the new legal framework by the end of 2002.

In addition, the European Council:- Renews its call to Member States to reduce the overall level of State aid as a percentage of GDP (Gross Domestic Product) by 2003, and onwards, and to redirect such aid towards horizontal objectives of common interest, including economic and social cohesion, and target it to identified market failures. Less and better-targeted State aid is a key part of effective competition.- Urges the Council to agree the pending legislative package on public procurement at its May meeting with a view to its final adoption as early as possible in 2002.- Asks the Commission to make specific references to outstanding technical barriers in its current Internal Market Scoreboard.- Notes the Commission's intention to present, as soon as possible, the follow-up to its Communication on an Internal Market Strategy for Services, including any necessary concrete actions. In this context, the European Council reaffirms the importance for the economic and social development of the Union of improving the quality of public administrations.

Efforts to simplify and improve the regulatory environment will be vigorously pursued at both national and Community level, including inter-institutional aspects, with particular emphasis on the need to reduce the administrative burden on SMEs. The European Council invites the Commission to submit, in time for its next session at Seville, the Commission's Action Plan, which should take into account in particular the recommendations of the Mandelkern Group on Better Regulation.The European Council invites the Council, on the basis of Commission proposals and in the light of the conclusions of the Financial Stability Forum, to analyse, before June 2002, the requirements of good and transparent corporate governance and to examine the possibility of creating a group of "wise men".At Ghent the European Council called on the EIB (European Investment Bank) to step up lending in selected sectors to contribute to the recovery of the EU economy. The European Council welcomes the EIB's recent response to that request through mobilisation of an estimated loan volume of EUR 4-4.5 billion over two years, and further encourages the Bank to support investment in sectors particularly relevant to fostering economic integration, economic and social cohesion and growth and employment in the Union.

Reinforcing social cohesion: the Social Agenda.The European social model is based on good economic performance, a high level of social protection and education and social dialogue. An active welfare state should encourage people to work, as employment is the best guarantee against social exclusion. The European Council considers the Social Agenda agreed at Nice to be an important vehicle for reinforcing the European social model. The Spring European Council must be the occasion for an in-depth review of progress in bringing about its objectives. This review should lend further impetus and lead to appropriate initiatives where necessary. The Lisbon goals can only be brought about by balanced efforts on both the economic and social fronts. As far as the social front is concerned, this includes:- Increasing the involvement of workers in changes affecting them: in this connection, the European Council invites the social partners to find ways of managing corporate restructuring better through dialogue and a preventive approach; it calls on them to engage actively in an exchange of good practice in dealing with industrial restructuring.- Enhancing the qualitative aspects of work: as regards in particular the health and safety dimension, the European Council invites the Council to examine as a matter of priority the forthcoming Commission communication on a Community health and safety strategy.The European Council underlines the importance of safety in heavy goods traffic and the need to ensure compliance with and the further development of the social provisions and requests the Council to conclude its work on the relevant draft Regulation before the end of 2002.The European Council stresses the importance of the fight against poverty and social exclusion. Member States are invited to set targets, in their National Action Plans, for significantly reducing the number of people at risk of poverty and social exclusion by 2010.In order to address the challenge of the ageing population, the European Council calls for the reform of pension systems to be accelerated to ensure that they are both financially sustainable and meet their social objectives; in this context it stresses the importance of the joint Commission and Council report on pensions to the Spring 2003 European Council, to be drawn up on the basis of the National Strategy Reports due in September 2002. It takes note of the initial Council report on health care and care for the elderly and invites the Commission and the Council to examine more thoroughly the questions of accessibility, quality and financial sustainability in time for the Spring 2003 European Council.The European Council stresses the importance of the declaration made at the Council (Employment and Social Policy) on the subject of violence against women.

Subdivision

The European Council has identified three broad areas in the pursuit of the Union's long term objectives:

_ Active policies towards full employment: more and better jobs.- A reinforced employment strategy.- Promoting skills and mobility in the European Union.

_A competitive economy based on knowledge.- Education.- Research and frontier technologies.

Implementation

The European Council has identified three broad areas which require specific impetus in view of their central role in the completion of a genuinely common economic area and the pursuit of the Union's long term objectives. In the present circumstances, the European Council considers that they can also make an important contribution to economic recovery.

_Active policies towards full employment: more and better jobs.Full employment in the European Union is the core of the Lisbon Strategy and the essential goal of economic and social policies, which requires the creation of more and better jobs. It is therefore necessary to continue paying special attention to the reforms of employment and labour market policies.The European Council welcomes the holding of the Social Summit prior to the Spring European Council, and the adoption by the social partners of a joint framework for action for the lifelong development of competence and qualifications. The European Council urges the Social Partners to place their strategies in the various territorial (European, national, regional and local) and sectoral spheres at the service of the Lisbon Strategy and Objectives and to that end to produce an annual report on their efforts both at national level, in the Employment Plans, and at European level, to be submitted directly to the Social Summit. The multiannual programme which they will submit in December 2002 should already include that contribution, particularly with regard to the adaptability of businesses in matters such as collective bargaining, wage moderation, improved productivity, lifelong training, new technologies and the flexible organisation of work.-A reinforced employment strategy.The Luxembourg Employment Strategy has proved its worth. The 2002 mid-term review of the Strategy must build on its achievements, and incorporate the targets and goals agreed at Lisbon. In this regard, the Strategy must: be simplified, in particular by reducing the number of guidelines, without undermining their effectiveness; align the time frame with the Lisbon deadline of 2010, including an intermediate evaluation in 2006 to monitor achievement of the Stockholm intermediate objectives, as defined by subsequent European Councils; reinforce the role and responsibility of social partners in implementation and monitoring of the guidelines.The revised Employment Strategy should focus on raising the employment rate by promoting employability and by removing obstacles and disincentives to taking up or remaining in a job, while preserving high protection standards of the European social model. As indicated in the report on labour force participation, a strong interaction between social partners and public authorities is needed, and in particular a priority focus on lifelong learning, quality in work and gender equality.

In terms of current employment policies, inter alia: where Member States pursue tax cuts, priority should be given to reducing the tax burden on low-wage earners; tax and benefit systems should be adapted to make work pay and encourage the search for jobs. Members should pursue a review of aspects such as conditionality of benefits, eligibility, duration, the replacement rate, the availability of in-work benefits, the use of tax credits, administrative systems and management rigour; in order to guarantee the EU's competitiveness and to improve employment across skills and geographical areas, it is crucial that national labour institutions and collective bargaining systems, respecting the autonomy of social partners, take into account the relationship between wage developments and labour market conditions, thereby allowing evolution of wages according to productivity developments and skills differentials; in order to strike a proper balance between flexibility and security, Member States, in line with national practice, are invited to review employment contract regulations, and where appropriate costs, with a view to promoting more jobs; Member States should remove disincentives to female labour force participation and strive, taking into account the demand for childcare facilities and in line with national patterns of provision, to provide childcare by 2010 to at least 90% of children between 3 years old and the mandatory school age and at least 33% of children under 3 years of age; early retirement incentives for individuals and the introduction of early retirement schemes by companies should be reduced. Efforts should be stepped up to increase opportunities for older workers to remain in the labour market, for instance, through flexible and gradual retirement formulas and guaranteeing real access to lifelong learning. A progressive increase of about 5 years in the effective average age at which people stop working in the European Union should be sought by 2010. Progress in this field will be analysed annually before every Spring European Council.

-Promoting skills and mobility in the European Union.The European Council welcomes the Commission Action Plan to remove the barriers within European labour markets by 2005, and calls on the Council to take the necessary steps to put into practice the proposed measures. Priority should be given to: in accordance with the Action Plan adopted at Nice, putting into place the legal conditions required to ensure genuine mobility for all those involved in education, research and innovation; lowering regulatory and administrative barriers to professional recognition as well as other barriers resulting from failure to recognise formal qualifications and non-formal learning taking into account the paragraph on education below; ensuring that all citizens, and in particular groups such as unemployed women, are well equipped with basic qualifications, especially those linked with ICTs (Information and Communication Technologies); increasing where appropriate the transferability of social security rights, including pensions, across the European Union. In this context, the European Council asks for work to be pursued as a matter of urgency, on the basis of the parameters agreed at the Laeken European Council, on the reform of Regulation (EEC) No 1408/71 on the coordination of social security systems, so that the new Regulation can be adopted before the end of 2003.

Concrete steps are needed. In this regard, the European Council has decided that: a European Health Insurance Card will replace the current paper forms needed for health treatment in another Member State. The Commission will present a proposal to that effect before the Spring European Council in 2003. Such a card will simplify procedures, but will not change existing rights and obligations; a one-stop European Job Mobility Information Web Site, in close cooperation with the Member States, will be established, with a view to its full operability by the end of 2003, at the latest.

_ Connecting European Economies.

- Financial markets.Only through an integrated and efficient European capital market will consumers and business alike reap the full benefits of the euro. Competitive financial markets will lead to increased choice and lower prices for consumers and investors, with appropriate levels of protection. The European Council therefore: welcomes the agreement on the Lamfalussy proposals and urges their immediate implementation; reaffirms its strong commitment to implementing the Financial Services Action Plan (FSAP) and achieving fully integrated securities and risk capital markets by 2003 and financial services markets by 2005; asks the Council and the European Parliament to adopt as early as possible in 2002 the proposed Directives on collateral, market abuse, insurance intermediaries, distance marketing of financial services, financial conglomerates, prospectuses and occupational pension funds and the international accounting standards Regulation.

- Integrating European Energy, Transport and Communication Networks.Powerful and integrated energy and transport networks are the backbone of the European internal market. Further market opening, appropriate regulation, improved use of existing networks and completion of missing links will increase efficiency and competition, and ensure an adequate level of quality, as well as reduced congestion and thus enhanced sustainability.

In the field of Energy the European Council: welcomes the first Commission report on the effective opening of the internal market for gas and electricity, agreed in Stockholm. It calls on the Commission to update it annually before every Spring European Council so that effective progress can be assessed; urges the Council and the European Parliament to adopt as early as possible in 2002 the pending proposals for the final stage of the market opening of electricity and gas, including: freedom of choice of supplier for all European non-household consumers as of 2004 for electricity and for gas. This will amount to at least 60% of the total market; in the light of experience and at a date before the Spring European Council in 2003, a decision on further measures taking into account the definition of public service obligations, security of supply and in particular the protection of remote areas and of the most vulnerable groups in the population; separation of transmission and distribution from production and supply; non-discriminatory access for consumers and producers to the network, based on transparent and published tariffs; establishment in every Member State of a regulatory function, within the appropriate regulatory framework, with a view to ensuring in particular effective control of the tariff-setting conditions; urges the Council to reach as early as possible in 2002 an agreement for a tariff-setting system for cross-border transactions in electricity, including congestion management, based on the principles of non-discrimination, transparency and simplicity; agrees the target for Member States of a level of electricity interconnections equivalent to at least 10% of their installed production capacity by 2005. Financing requirements should be met mainly by the enterprises involved; urges the adoption by December 2002 of the revision of the guidelines and accompanying financial rules on Trans-European Energy Networks (TEN), and notes the intention of the Commission to present the report on the security of supplies based on the results of the debate generated by the Commission's Green Paper on Security of Energy Supplies, with a view to its next meeting in Seville; invites the Commission and the Council to analyse for the Spring European Council in 2006 the global performance of the European internal energy market, in particular the degree of transposition of the regulatory framework, and its effects on consumer protection, infrastructure investments, effective integration of markets and interconnections, competition and environment.

In the field of Transport, the European Council:Welcomes the progress on GALILEO and asks the Council (Transport) at its meeting in March to take the necessary decisions regarding both the funding and launching of this programme and the setting-up of the Joint Undertaking, in cooperation with the European Space Agency; noting the importance of the Community accession to EUROCONTROL, calls for work to be pursued actively before the end of 2002 on the package of Commission proposals so that the decisions can be taken to bring about a Single Sky in 2004; furthermore, decisions on the proposed rules on airport slot allocation should be taken by the end of 2002; on the basis of a report by the Commission on the operation of the first railway package, calls on the Council to pursue work on the second package, which includes, inter alia, interoperability and high safety standards; calls for the adoption by December 2002 of pending proposals on port services and public services contracts; requests the Council and the European Parliament to adopt, by December 2002, the revision of the guidelines and the accompanying financial rules on Trans-European Transport Networks (TEN), including new priority projects identified by the Commission, with a view to improving transport conditions with a high level of safety throughout the European Union and to reducing bottlenecks in regions such as, among others, the Alps, the Pyrenees and the Baltic Sea.In the field of communications, the adoption of the new telecoms package means that the same rules will apply to all converging technologies, creating more competition and a level playing field in Europe. Member States are asked to ensure full implementation of the new communications regulatory package by May 2003; in addition, the Directive on data protection should be adopted rapidly.Further progress is needed. For the next phase, the European Council: attaches priority to the widespread availability and use of broadband networks throughout the Union by 2005 and the development of Internet protocol IPv6; calls on the Commission to draw up a comprehensive eEurope 2005 Action Plan, to be presented in advance of the Seville European Council, focusing on the abovementioned priorities and the security of networks and information, eGovernment, eLearning, eHealth and eBusiness; calls on Member States to ensure that, by the end of 2003, the ratio of internetconnected PCs to pupils is brought down across the European Union to one for every fifteen pupils.

Technological convergence affords all business and citizens new opportunities for access to the Information Society. Digital television and third-generation mobile communications (3G) will play a key role in providing widespread access to interactive services. The European Council accordingly: calls upon the Commission and the Member States to foster the use of open platforms to provide freedom of choice to citizens for access to applications and services of the Information Society, notably through digital television, 3G mobile and other platforms that technological convergence may provide in the future; and to sustain their efforts towards the introduction of 3G mobile communications; invites the Commission to present at the Seville European Council a comprehensive analysis of remaining barriers to: the achievement of widespread access to new services and applications of the information society through open platforms in digital television and 3G mobile communications, the full roll-out of 3G mobile communications, the development of eCommerce and eGovernment and the role that national electronic identification and authentication systems could play in this context.

- Quality Public Services.The integration of European networks and the opening of utility markets should take full account of the importance of quality public services. In this regard, the European Council underlines the importance for citizens, and for territorial and social cohesion, of access to services of general economic interest. In this context, the European Council asks the Commission to: present its communication on evaluation methodology at the May Council and report to the Seville European Council on the state of work on the guidelines for State aids and if necessary propose a block exemption regulation in this area; continue its examination with a view to consolidating and specifying the principles on services of general economic interest, which underlie Article 16 of the Treaty, in a proposal for a framework directive, while respecting the specificities of the different sectors involved and taking into account the provisions of Article 86 of the Treaty. The Commission will present a report by the end of the year.

_ A competitive economy based on knowledge.

- Education.The European Council welcomes the agreement on the detailed Work Programme for 2010 for education and training systems. The European Council sets the objective of making these educative and training systems a world quality reference by 2010. It agrees that the three basic principles to inspire this Programme shall be: improved quality, facilitation of universal access, and opening-up to the wider world. It invites the Council and the Commission to report to the Spring European Council in 2004 on its effective implementation.

The European Council calls for further action in this field: to introduce instruments to ensure the transparency of diplomas and qualifications (ECTS, diploma and certificate supplements, European CV) and closer cooperation with regard to university degrees in the context of the Sorbonne-Bologna-Prague process prior to the Berlin meeting in 2003; similar action should be promoted in the area of vocational training; to improve the mastery of basic skills, in particular by teaching at least two foreign languages from a very early age: establishment of a linguistic competence indicator in 2003; development of digital literacy: generalisation of an Internet and computer user's certificate for secondary school pupils; the European Council calls on the Commission to undertake a feasibility study to identify options for helping secondary schools to establish or enhance an internet twinning link with a partner school elsewhere in Europe, and report back to the Seville European Council in June; to promote the European dimension in education and its integration into pupils' basic skills by 2004.The European Council welcomes the Commission's Communication on "Making a European Area for Lifelong Learning a Reality" and invites the Council to adopt a resolution on Lifelong Learning before the European Council in Seville, taking into account the European Employment Strategy.

- Research and frontier technologies.In order to close the gap between the EU and its major competitors, there must be a significant boost of the overall R&D and innovation effort in the Union, with a particular emphasis on frontier technologies. The European Council therefore: agrees that overall spending on R&D and innovation in the Union should be increased with the aim of approaching 3% of GDP by 2010. Two-thirds of this new investment should come from the private sector; notes the Commission's intention to propose measures in Spring 2003 to better integrate innovation into a European Knowledge Area, with the aim of improving the use of intellectual property rights across Europe, further developing and strengthening private investment and the use of risk capital in research and increasing networking between business and the science base; reaffirms the importance of the Community Patent and invites the Council to reach a common political approach at its meeting in May. The Community Patent must be an efficient and flexible instrument obtainable by businesses at an affordable cost, while complying with the principles of legal certainty and non-discrimination between Member States and ensuring a high level of quality.

Frontier technologies are a key factor for future growth. The European Council asks the Council to examine before June 2002 the Commission's communication "Life Sciences and Biotechnology - a strategy for Europe". It asks the Council and the Commission to develop measures and a timetable which enable Community businesses to exploit the potential of biotechnology while taking due account of the precautionary principle and meeting ethical and social concerns. The Commission is invited to report on progress in advance of the Spring European Council 2003.

Remarks

This information is based on the Presidency Conclusions of the Barcelona European Council (15 and 16 March 2002).